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tax policy

ACC supports federal tax policy that minimizes tax cost and reduces complexity so that the U.S. chemical industry can compete successfully in U.S. as well as foreign markets. Tax rates should be low, and the structure of the tax system should prevent artificial inflation of taxable income. The structure of the tax system should comport with the underlying economics of business transactions.

Contact: Kendra Borja
Phone: 703-741-5835

The U.S. chemical industry is vital to the U.S. economy by providing constituents for virtually all manufactured products, and by continuing development of new technology that fuels economic growth.  Capital intensive, the chemical industry is burdened by some aspects of the federal tax system that inflates income subject to tax artificially and that results in effective double taxation of some foreign earnings.  Such aspects of the federal tax system produce higher tax cost to U.S. companies than the home-country tax costs to foreign competitors.  The higher tax cost to U.S. companies is critically important because the economics of the global market for chemical products requires that U.S. companies compete in foreign markets in order to remain competitive in foreign as well as U.S. markets.  The structural problems of the federal tax system adversely affect both companies with headquarters in the U.S. as well as U.S. subsidiaries of foreign parent companies, thereby discouraging foreign investment in the U.S.

Current Issues:

Among specific policy issues currently of concern to chemical manufacturers are the following legislative proposals and regulatory issues (not necessarily in order of priority to the ACC):

  • Limitation on deductions with respect to costs of complying in good faith with federal, state and local business regulations undertaken in the ordinary course.
  • Limitation on deductions for punitive damages in legal actions, regardless of no wrong-doing by the defendant.
  • Codification of the “economic substance” doctrine.
  • Changes in rules for deduction for intercompany debt.
  • Grant of overly broad authority to Treasury to disallow foreign tax credits.
  • Technical corrections to 2004 legislation.
  • Extension and expansion of the R&D tax credit.
  • Taxation of hydrocarbon solvents and other petrochemicals ostensibly subject to illegal blending with taxable fuels.
  • Imposition of new Superfund taxes, absent fundamental reform of the Superfund program.
  • Early implementation by Treasury of certification standards for the coal gasification credit for industrial applications.
  • Liberalization of technical rules governing taxation of U.S. subsidiary companies.